International Monetary Fund said Tuesday that Spain's economy - already in double-dip recession - will contract by 1.3 percent next year - more than double its previous prediction.

Spain, with near 25 percent unemployment, has introduced a series of austerity and labor measures in a desperate bid to bring down its deficit and convince investors it can manage its finances without outside help.

Madrid is now pushing for the European Central Bank to intervene in the secondary market and bring down its borrowing costs, but the ECB insists the country must formally apply for aid first.

"Spain remains the major focal point and in this regard there is no progress in the country moving forward with a bailout request," analysts at Credit Agricole CIB in Hong Kong said in a market commentary. "The market tone will continue to remain cautious but we don't expect a major relapse in risk appetite."

The IMF also cut its estimates for global economic growth, warning that mature economies are at risk of recession.

Investors on Wall Street were discouraged by the IMF report as well as expectations of lower corporate earnings. Analysts expect earnings for Standard & Poor's 500 companies to be lower than a year ago - the first time that has happened in almost three years.

Lucia Cuttone works with fellow traders on the floor of the New York Stock Exchange Tuesday, Oct. 9, 2012. Another dire prediction about global economic growth is sending stocks lower on Wall Street in early trading. (AP Photo/Richard Drew)